During the Clinton years, the rich got richer - but what happened to the rest of us?
The decade of decadence
The rich got richer — but what happened to the rest of us?
Work continues on an 11,500-square-foot home in an exclusive neighborhood of Houston for former Enron CFO Andrew Fastow. He's among the wealthy execs who benefited from the stock-market boom of the 1990s.
By Eric Alterman
MSNBC CONTRIBUTOR
Feb. 7 — Remember how furious conservatives were about the Clinton tax hikes of 1993? It’s hard to know just what they were so upset about. The super-rich made out like bandits anyway. Those who cashed out, Enron executive-style, are sitting pretty while the rest of us are stuck with trying to clean up the mess, figuring out where all the riches went.
WELL, HERE’S where they went. They went to the rich. According to just-released government figures, the number of Americans with million-dollar incomes more than doubled during the second half of the ’90s. Only 87,000 people made a million bucks in 1995; five years later, this figure rose to more than 205,000. And we’re not talking just a lousy million; we’re talking about an average of $3.2 million. This tiny group captured a quarter of the nation’s total personal income growth from 1995 through 1999. Remember this all took place during a Democratic administration. According to New York University economist Edward N. Wolff, wealth is more concentrated at the top in the United States than at any time since the Great Depression.
ACCOUNTING FOR THE WEALTH
People making average salaries paid a higher percentage of federal taxes than they did back when, even among the rich, a million-dollar income was still something to boast about.
Yet while the super-rich have been raking it in as never before, the contribution these people made to the federal tax pie fell by 11 percent. Because of the run-up in the stock market coupled with a cut in the capital-gains tax rate, normal people making average salaries paid a higher percentage of federal taxes than they did back when, even among the rich, a million-dollar income was still something to boast about.
What we still don’t know is just how much the alleged wealth that was created during this period was, like Enron’s, an accounting fiction or worse. Friends of Bush buddy Ken Lay and Democratic moneyman Terry McAuliffe don’t need to worry about this question. They had the information and personal contacts to know how to get out while the getting was good. Lay pocketed hundreds of millions from a failed company that left many of its investors nearly bankrupt. McAuliffe pocketed a cool $18 million from Global Crossing on an investment of just $100,000 while that company’s honest shareholders got fleeced, Enron style. As we have learned from the inner workings of Enron and its former auditor, Arthur Andersen, these kinds of financial shenanigans are just the tip of a dirty iceberg.
EXPLOSION OF PHANTOM RICHES?
Last week, I wrote a column about the troubles I had with my cell-phone service and the response was overwhelming (See "A trip to cell hell” ) Numerous readers called the company and six different people called me at home to offer to help straighten out my bill. I was given all kinds of phone numbers to use should any trouble ever arise again — phone numbers not available to people who do not get to have their complaints published in forum like this one. Their service, I’m guessing, will continue to stink no matter what company they choose. Just where, I’m wondering, is the big benefit of the explosion of riches in the New Economy?
Again, lots of people got very rich during the telecom explosion of the late ’90s, but how many of the gains for real people were real? The majority of everyday shareholders of companies like Cisco, Lucent, and Verizon have taken a massive beating from which it will take perhaps decades to recover. One reader jokingly credited me with creating a run on WorldCom stock, which also took it on the chin last week and is down between 65 percent and 70 percent during the past 12 months. (If only I had that kind of power….)
TRUTH AND CONSEQUENCES
In any case, it will be a long time before we know just how much of the ’90s euphoria was foolishness and how much was the collusion of criminals. There’s no doubt some of it was driven by genuine technological advances that will, over time, offer people genuine benefits in their lives.
But just about the only thing that we know for certain is that whatever happens, the rich will get richer and the rest of us will suffer the consequences.
Eric Alterman is a columnist for The Nation and a regular contributor to MSNBC.com. |
